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The Nasty, Money-Sucking Downside To Rising Home Values

You pay attention to real estate values, and you get a thrill every time someone in your community pays more for their house than you did. Equity is awesome. Until it isn’t.

What?

Yes, it’s the catch-22 of rising real estate values, and it might be about to hit you squarely in your mailbox. That dreaded property tax can be a killer, sucking up your money and making that equity seem downright excruciating.

“Property taxes will jump significantly in most cities this year,” said Washington state’s HeraldNet. In Snohomish County, Washington, that means a countywide 9.8 percent increase. In San Antonio, TX, 11 percent. And statewide in Massachusetts, an average of four percent. That can mean anywhere from a few bucks to a few hundred dollars a month, depending on your home’s value.

The higher property taxes are the product of an improving economy and rising home values nationwide. But in many cases, homeowners are paying more than their fair share.

“Chances are pretty good that you’re paying more in property taxes than you should be,” said Kiplinger. “According to the National Taxpayers Union, as many as 60% of properties in the U.S. are assessed at a higher amount than their current value.”

So how do you right this wrong and put that money back in your pocket?

Fight back

“With property taxes continuing to rise nationwide, many homeowners are starting to challenge what they see as exorbitantly high demands made on them by their local assessor’s office,” said This Old House. “Follow their lead, and you have a 50 percent chance of succeeding.”

The first step is to “assess your assessment,” said Kiplinger. “Research how your local government assesses property. Look at the length of time between assessments as well as how the market value of a home is determined.”

Homeowners will then want to check for errors in their home’s assessment. “Your local assessor’s office can provide your property’s record card (it may be referred to as the working papers or a worksheet), which has information used to assess your property, such as dimensions and number of rooms,” said Kiplinger. “Check that the square footage listed is correct for both the house and the land. If you find an outright error — for example, the card says your home has three bathrooms but it has only two — you may be able to show the assessor your blueprints to get a reduction and skip the formal appeal.”

Reviewing other comparable properties’ report cards on the assessor’s website may also be helpful to establish if the assessed value is consistent. “You may be able to argue for a reduction based on certain differences between your home and comparable ones,” they said.

File an appeal

If you feel you have grounds for an appeal, “The first thing you should do is contact your local Tax Assessor’s Office to find out the exact procedure for your locality,” said Moneycrashers. In some areas, it’s as easy as visiting the local appraisal district’s website.

“I’m stumped that only about five out of every 100 eligible homeowners use the new tool of protesting property taxes online at an appraisal district’s website,” said the Dallas Morning News. “You plug in your estimate and attach evidence showing your home’s value in the appraisal district’s software. If the software and a human agree, voila. If you’re rejected, you can go to a hearing and continue your protest. Or drop it and pay what they want.”

If a hearing is involved, it’s critical to learn the important dates involved because homeowners have a short window to file their paperwork. “Since you might only have 60 days (from the time you receive the assessment in the mail)…you don’t want to sit on it,” said This Old House. Equally important is gathering as much documentation as possible to prove your case:

  • Assessments of comparable properties in your area
  • Detailed descriptions of those properties and especially any features that might make them more valuable than your home (upgrades, additions)
  • Tax records
  • Photos

“If you do succeed at getting the tax reduced, great,” said This Old House. “If not, all it will have cost you is a few hours of your time and possibly a $5 to $30 filing fee.”

Other ways to lower your taxes

Homestead exemptions, reduced taxes for those over 65, who are disabled, or whose income allows them to exempt part of their property taxes—these are just a few of the ways homeowners might be able to lower their taxes outside of an appeal.

“Contact your state’s department of taxation or visit its website to see what breaks are available to you,” said Kiplinger.

Written by Jaymi Naciri for www.RealtyTimes.com Copyright © 2015 Realty Times All Rights Reserved.